Stocks were two for two for June, notching another gain Thursday as investors were encouraged by the sharpest jump in pending-home sales in 7 1/2 years.
"Probably for the time being the worst is over," said Michael Cohn, chief investment strategist at Atlantis Asset Management. "The market right now is losing its fear."
The Dow Jones Industrial Average rose 19.43, or 0.2 percent, to close at 8,740.87, after poking into positive territory for the year earlier in the day. It was the Dow's fourth-straight gain.
The S&P 500 gained 0.2 percent and the Nasdaq advanced 0.4 percent. The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended at 29.63, below the key 30 mark.
This came after the major indexes kicked off June with a 2-percent rally Monday amid signs of strength from China’s manufacturing sector and relief that General Motors finally entered bankruptcy protection. That came on the heels of May's 4.1-percent gain.
Investors were encouraged by a report Tuesday that showed pending sales of previously owned U.S. homes shot up 6.7 percentin April. It was the biggest jump since October 2001 and was well above the 0.5-percent expected.
Still, traders cautioned that this is a technical rally in a bear market.
The S&P has broken through its 200-day moving average of 920, and now all eyes are on the Dow to see when it will break its 200-day average.
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Financials fell again, reflecting the correction in the sector over the past few days, following the latest round of stock offerings to pay back government bailout funds.
American Express and JPMorgan were among the biggest drags on the Dow after the companies announced offerings.
Morgan Stanley fell after its offering but SunTrust Banks rose.
Goldman Sachs shares skidded amid news that the company plans to Industrial & Commercial Bank of China stake in order to improve its balance sheet.
"[T]he market will really get going if the financials stop this kind of little hiccup," Cohn said. He advises keeping an eye on the "good financials" such as JPMorgan, Morgan Stanley and Wells Fargo.
US-traded shares of British bank Barclays tumbled following news that Abu Dhabi sold an 11 percent stake in the company. The sale stemmed from an investment the government made to get Barclays through the financial crisis.
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General Motors shares tumbled 19 percent on this, its first day of trading on the Pink Sheets under the symbol GMGMQ.
The market was buzzing with news that GM finally found a buyer for its Hummer unitand it's — drumroll, please — a Chinese heavy industrial company.
Meanwhile, Ford continued to benefit from the fallout in the auto sector, with stock continuing to rise after gaining about 25 percent in the past few weeks.
Also giving Ford a boost: Its sales fell 21 percent in May, roughly half of the decline expected, and it topped Toyota for the second month in a row.
Overall, auto sales were mixed: GM and Toyota also beat expectations, while Honda hit its target and Nissan missed.
Alcoa was the biggest gainer on the Dow, up 7 percent, as the rally also continued to be driven by commodities.
Crude oil settled at $68.55 a barrel after earlier topping $69 a barrel.
On the economic front, May's same-store sales, due out Thursday, are expected to show declines, despite Memorial Day sales, warmer weather and discounting.
Shares of retailers were mixed: Department stores continued to advance, with Sears Holdings the top percentage gainer on both the S&P and Nasdaq. But Gap and Wal-Mart fell.
Oracle rose 2.2 percent after CEO Larry Ellison said the software maker might get into the low-cost laptop business.
Volume was moderate, with 1.41 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, about 3 to 2.
This Week:
TUESDAY: Earnings from Hovnanian after the bell
WEDNESDAY: Weekly mortgage applications; ADP employment report; ISM services index; factory orders; weekly crude inventories; Earnings from Toll Bros.
THURSDAY: NY Fed Pres. Dudley speaks; Chain-store sales; ECB, BOE rate decisions; weekly jobless claims; Earnings from Ciena
FRIDAY: May jobs report; consumer credit
Send comments to cindy.perman@nbcuni.com.
